BUSINESS BROKERS

A business broker is a professional business ownership transfer agent who negotiates a transaction between a seller and a buyer of companies, or principals. Business brokers act as an intermediary between the two parties through a number of tasks, including but not limited to: business valuation, advertising a business for sale, prepare a company brief or information memorandum, screen and assess interested buying parties, negotiate price and facilitate due diligence and audits, among others. As such, business brokers are also called transfer agents or intermediaries.

The brokerage deal is protected by a signed agreement or representation contract between the business broker or his or her firm and the party which he or she is intermediating with (either the seller or the buyer). While the negotiation is underway, the business broker also helps the company owner to focus on the firm's operation, since a transaction may take from six months to a year on average.

If a seller is the one contracting the service of the business broker, that seller is called the client and the buyers are called the customers. Conversely, if a person or an entity wishes to buy a certain company and seeks the services of the business broker, that buyer is the client and the potential seller is the customer. In both cases, "customers" do not have a binding agency relationship with the business broker or the brokerage house, since the customer is the party being "wooed." The clients solely pay the broker's commission.

A business brokerage house or firm employs business brokers and assigns accounts to them, while independent business brokers operates through his or her own accredited firm using established personal contacts. Business brokers earn income on a commission basis. They may charge an hourly rate or per contract rate for their services.